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Are Microsoft and Cisco on a collision course?
Could the latest threat to Microsoft's desktop software ambitions come from Cisco Systems? That is the question being pondered by some analysts in the wake of Cisco's $3.2 billion deal to acquire WebEx, a web-based conferencing and business collaboration company.
- Financial Times
- Published: 13:31 October 29, 2008
San Francisco: Could the latest threat to Microsoft's desktop software ambitions come from Cisco Systems?
That is the question being pondered by some analysts in the wake of Cisco's $3.2 billion deal to acquire WebEx, a web-based conferencing and business collaboration company.
They may have started from different ends of the technology spectrum, but over the past few years, Cisco, the world's biggest maker of data networking equipment, and Microsoft, the world's biggest software company - have found themselves increasingly on a collision course in the burgeoning market for corporate telephone, teleconferencing and other communications services.
Big market
Observers say that the market for services that combine business telephony, voicemail, instant messaging, and other forms of business collaboration into a single package for officeworkers could soon be worth $35 billion a year.
Microsoft hopes that broadening its business software suite to include office communications tools will help shore up its lucrative desktop software business. That business appears under threat as Google and other companies continue to invest in web-based alternatives to Microsoft Office.
Meanwhile, Cisco's plans to buy WebEx, announced last month, mark the company's latest move into the same market being targeted by Microsoft.
WebEx is a web-based service that allows customers to hold teleconferences and share documents over the internet.
Inder Singh, an analyst at Prudential, says Cisco and Microsoft, together with communications groups like Avaya and Nortel, are all rushing to capitalise on the increased importance of software, rather than hardware, as an enabler of communication in the office. "Everyone understands that it's about owning the application, and they're all trying to move into the market dominated by Microsoft."
Charlie Giancarlo, Cisco's chief development officer, acknowledges that the company's moves into business communication have led to increased competition with its longstanding partner. But he says the relationship between Cisco and Microsoft remains one based on co-operation.
"We have a broad relationship with Microsoft," Giancarlo says. "It is 90 per cent synergistic and 10 per cent competitive. We are going to be competitive on unified communications."
Another area where Cisco and Microsoft are increasingly squaring off is business telephony. Cisco has risen to become the world's biggest provider of office telephone services, with 24 per cent market share.
Probe
Microsoft has also been investing. Jeff Raikes, president of Microsoft's business group, last month outlined the company's plans to turn its Microsoft Office business software suite into a communications hub.
"Within three years, more than 100 millio people will be able to make phone calls from Microsoft Outlook, SharePoint and other Microsoft Office Systems applications," Raikes said in a company webcast.
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